SABMiller, AB InBev Agree on Deal in Principle Update
13 October 2015 - 6:03PM
Dow Jones News
By Saabira Chaudhuri
LONDON-- SABMiller PLC's board has agreed on the key terms of a
sweetened potential takeover offer by Anheuser-Busch InBev NV
valuing it at GBP68 billion ($104.5 billion), setting the stage for
the world's two largest brewers to combine.
After weeks of back and forth, SAB Miller's board has agreed to
unanimously recommend to its shareholders AB InBev's proposal to
pay GBP44 a share to buy the London-based brewer, marking a 50%
premium to its share price on Sept 14, the day before media
speculation about a potential deal emerged. For 41% of stock AB
InBev is offering a partial-share alternative, essentially a
combination of cash and stock translating into a lower per-share
price of GBP39.03.
SABMiller has asked the U.K. Takeover Panel to extend the
so-called put-up-or-shut-up deadline, under which AB InBev needs to
make a firm offer for it or walk away, to Oct 28. The previous
deadline was Wednesday.
If AB InBev can't get the necessary regulatory clearances for
the deal to close, or its shareholders don't approve the deal, the
brewer would pay SAB Miller a breakup fee of $3 billion. AB InBev
said it will pay for the cash part of the deal through its internal
resources and issuing new debt.
The revised proposal is the fifth AB InBev has made for
SABMiller in recent weeks and comes after the Belgian brewer on
Monday said it was prepared to offer SABMiller's shareholders
GBP43.50 a share in cash and a partial-share alternative of
GBP38.88, translating into a combined price of GBP67.4 billion.
SABMiller had rejected its first three proposals, saying they
significantly undervalued it.
SABMiller's two largest shareholders, Altria Group Inc. and the
Santo Domingo family--which have a 41% stake in the
London-headquartered brewer between them--had initially come down
on different sides of the offer. Altria, last week offered its
support, but the Santo Domingo family joined the rest of the board
in rejecting AB InBev's offer.
A tie-up between the two beer companies would bring household
brands such as Budweiser, Corona and Stella Artois together with
Pilsener Urquell, Grolsch and Peroni, and give the combined company
a major presence in the U.S., China, Europe, Africa and Latin
America. Together, AB InBev and SABMiller sell over 30% of the
world's beer volumes.
Such a deal has been rumored for years, and has been described
by some analysts as the last major piece of consolidation that
remains in the beer industry. Research firm Euromonitor has
estimated that the combined company's market share would be 29%
after the deal after likely divestments, giving it a 20 percentage
point lead over the next biggest brewer, Heineken NV.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
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(END) Dow Jones Newswires
October 13, 2015 02:48 ET (06:48 GMT)
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